Gladys Berejiklian has led the Coalition to a third term in government in New South Wales, despite a rising tide of minor parties and independents, and has become the first woman elected premier of the state at a general election.

Many seats were still too close to call on Saturday evening but one thing was certain – the night had been a disaster for Labor, with no chance of forming government and no major improvement in their statewide primary vote compared with the election four years earlier.

Berejiklian told an exuberant crowd of party faithful gathered at the Sofitel in Sydney, which included the former prime minister John Howard and the former premier Nick Greiner, that she was proud of NSW, “a state in which someone with a long surname – and a woman – can be the premier”.

“I will continue to – my team and I – will continue to work our guts out to make sure this state and its people continue to ensure that we have the best opportunities on this planet,” she said in her victory speech.

“That we continue to provide a strong budget for the projects, infrastructure and services they need to take the pressure off families.”

Berejiklian said she would work closely with minority parties, “whether or not my government is a majority or minority government”.

Early counting for the the upper house also indicated the former federal Labor leader turned One Nation lead candidate Mark Latham will make a formal return to politics, with the party likely to secure at least one seat.

An ebullient prime minister, Scott Morrison, warmed up the crowd before the premier arrived on Saturday night, taking to the stage to declare: “How good is Gladys Berejiklian and how good is the Liberal party here in NSW?”

He attributed the win to the state government’s record of economic management and suggested it bode well for his own government’s fortunes at the forthcoming May federal election.

“In two months from now we’ll back here celebrating another Liberal National government returned to office for the same reason,” he said.

The opposition leader, Michael Daley, conceded defeat on Saturday night and said his intention was to remain as the Labor leader in opposition. But he also warned there were lessons for both major parties in the result.

“One of the concerns I have about the result tonight, being someone who believes in the political stability that the two-party system does and has delivered to Australia and New South Wales is that it really hasn’t been all that great a night for the major parties,” he said.

“And we do have more work to do if we’re not going to see a continual erosion of public confidence in the political system.”

Labor’s campaign honed in on the government’s knockdown and rebuild of Allianz Stadium in Sydney and had its breakthrough moment when Daley threatened to sack influential broadcaster and SGG Trust board member Alan Jones during a live interview.

Daley defended the campaign on Saturday night as a “positive” one.

“We sought to make this campaign one of a contest of ideas on things like climate change, on the environment, disgusted as we were with the million dead fish in Menindee, and we sought to re-engage the Labor party with the regions and we have done just that and we can be very proud of your efforts in that regard,” he said.

But several Labor figures conceded the bad closing week of the campaign had hurt their vote.

On Monday a video surfaced that showed Daley lamenting that young Sydneysiders were being priced out of the city and were being replaced by “young people from typically Asia with PhDs” during an event in 2018.

“They were very, very poorly worded comments and he apologised for that,” Labor’s transport spokeswoman, Jodi McKay, said during the ABC’s election night coverage.

“Do I agree with what he said? No,” she said. “I do think that it did not help our case for forming government.”

The comments were believed to have hurt the campaign of Chris Minns, one of Labor’s rising frontbenchers, who had a close shave. Regarded as a future Labor leader, he held the seat of Kogarah with a 6.9% margin, but suffered a 3.7% swing as of late last night.

The area has a large Chinese population and Minns described his day outside polling booths as “tough.”

The Liberals fielded a 26-year-old Chinese-Australian, Scott Yung, as its candidate.

The bright spot for Labor was a win in Coogee by Marjorie O’Neill, who ousted the two-term Liberal Bruce Notley-Smith with a 5.3% swing recorded with around half the votes counted. Labor was also hopeful of picking up Lismore.

The Shooters looked a strong chance to pick up an extra two seats in the lower house at the expense of the Nationals – Murray and Barwon - tripling the party’s presence in the legislative assembly.

The Nationals leader, John Barilaro, who retained his bellwether seat of Monaro, continued to cite the leadership tensions in the federal National party as contributing to the drift to the Shooters.

“That’s going to play some role,” he said during an interview with the ABC. “But I also accept, as the leader of the NSW Nationals, that I’m responsible for our campaign, and I’ll take credit for it if we’re successful, and I’ll take responsibility if we lose a couple of seats.”

There was a strong showing by independents in several seats in the bush, such as Dubbo, Coffs Harbour and Wollondilly, though results were still close.

Swings were wildly variable around the state, with one Liberal staffer describing the incongruous results as akin to “100 byelections”.

Despite the protracted internal warfare in the NSW Greens and the departure of MLC Jeremy Buckingham, the Greens held on to all three of their lower-house seats.

Labor had hoped to take back Balmain, the inner Sydney electorate where the party was formed more than 100 years ago, but Greens MP Jamie Parker not only retained the seat but looked set to increase his margin. The party was also on track to easily hold Newtown and Ballina.